APMA News - January/February 2022 - A1

Young Physicians
January/February 2022 | Issue 74
your apma
Understanding RVUs
Rachel Albright, DPM, MPH
Compensation models evolve and change according to the needs of
our health-care system. Stemming from a desire to minimize payment
variability and influenced by a shift toward value-based care, the relative
value unit (RVU) was introduced as a compensation model by Medicare. This
model has been adopted as one of the major strategies for compensating
physicians and surgeons in a variety of health-care settings. Understanding
the RVU model may help physicians better negotiate a reasonable contract.
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for Young Physicians
is employed by a large group or healthcare
system in a standard compensation
model). APMA has representation at
the Relative Value Update Committee
(RUC), where RVUs are developed.
Here, APMA representation contributes
to the development of RVUs and protects
the interests of podiatrists.
Physician work RVUs (abbreviated
work RVUs [wRVUs]) are used to derive
the physician compensation model.
Physician wRVUs are determined based
on the estimated time to perform the
procedure/service, skill required, mental
effort, judgment, and stress.
The way a physician can determine
how much they will be compensated
(in general) is based on a simple formula:
Physician wRVU x
RVU Conversion Rate ($) =
Compensation
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EDITOR Tiffany Kildale
tkildale@apma.org
DESIGN Suzanne Kleinwaks Design
APMA gratefully acknowledges
the support of PICA, a
ProAssurance Company,
founding sponsor of the
Young Physicians' Program.
THE BASICS OF THE
RVU STRUCTURE
RVUs are assigned to health-care
resources. These resources include
practice expense RVUs, professional
liability insurance RVUs, and physician
work RVUs. The total RVU is
determined by adding these three RVUs
together, and the sum is then multiplied
by a conversion rate ($) to determine the
final compensation. The total RVU is
used by many third-party payers for payment
for services to the employer, and a
portion of this payment then gets passed
to the physician (assuming the physician
HOW PHYSICIANS GET PAID
WITH THE wRVU MODEL
Medicare sets the physician wRVU rate
that is associated with each CPT code-
this amount cannot be negotiated with
your employer. (This information can
be found on the CMS website at https://
go.cms.gov/31LrPG3). Your employer,
however, will decide the conversion rate.
Medical Group Management Association
(MGMA) offers data for physicians and
health-care systems regarding the average
productivity of physicians using the
RVU model (i.e., the average wRVUs
each specialty produces). This information
is often used by employers to
determine a fair conversion rate. MGMA
uses $40 as a standard conversion rate
for a traditional wRVU compensation
model. Using this rate, if we were to
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APMA News - January/February 2022

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